Most business operate with the level of staff they need, not what they can afford as if they would employ more or less subject to the rate of pay. This argument increasing pay cuts employment has been used many times, the introduction of Minimum Wage was on occasion and then as like now it was a false argument.

There are many factors in running a successful business and business which chose to pay less usually have a high turnover of staff, higher recruiting costs and training bills. Equally the staff is any companies greatest asset, not cost, try running a company with poor, unmotivated staff.

If wages increased by 10% over the next few years, I am not suggesting they will, many companies would greatly benefit from the higher spend this would generate.

“replace your employees with better ones” Recruitment is a expensive outlay in time, managerial skill and money for any business, (much greater than those who get to the interview stage might realise) and mistakes can be costly. Costs to the value of two or three years wages can be incurred by staff in businesses who should not have been hired: they may well be sacked within weeks, but costs they might cause might be incurred for months/years after any mistake, a big waste of tight resources.If past managers have recruited poorly then needing replacements can be a big& immediate call on resources, as the successful candidates fail to perform and get replaced and finding good candidates to fill holes quickly is necessary but expensive. As a result there is a focus on investing in people and organically growing talent businesses already have, as a cost efficient route to better work. some workplaces have extended this to the whole workforce, CEO to temp, Cleaners to Marketing Managers :we are a single team and aside from the office cleaner its just us, so not quite as new economy.

The amount of revenue/profit&cost per hour a employee/team division brings is a component of many things, does vary over days/months years and outlying staff may well be promoted or moved on as a result. Not just binary 0/1, good/bad but can take up a big amount of time working out, if effective systems aren’t in place to capture and quantify this. The key is to maintain and improve performance of the core, of most people of the team, while recognising even people from outside the business will take a chunk (eg the chancellor/outside professionals) out for what they put in. Wage rises can be a effective way of rewarding team members for upping their game, for taking on extra responsibilities or recognising there game has always been stronger, but the pie is bigger than it was in the past, with which to reward it. Ultimately professional/ more effective work, engendering greater numbers of returning clients and attracting new customers means more revenues and profit with which to recompense stakeholders. The 1997 act turned out to have beneficial effects that its opponents using snapshot views of economies didn’t expect. I suspect reaching £9 ph by 2025 etc will have dramatic impacts, most of which are positive. It also will save the government some money, which is probably why it is happening now.

raising wages in step with improving profitability is one tool towards boosting long term profitability/sustainability and can be used to small or large effect depending on circumstances. Whether or not shareholders agree its is a appropriate action is very much down to how it is communicated and what immediate results can be achieved.

Yes. Yes and to your final question: the accountant sets her own wages and invoices them as a expense for professional services in the accounts: I’ve never heard of a accountant recommending their wage be cut and am happy that the set up at the moment means we benefit from both a potentially good (she is qualified) and a actually good (she is engaged and applies her skills to make creative suggestion/ fill in paperwork precisely) accountant, who outperforms a accountant who is cheap as chips, who might be qualified to sign bits of paper, but is no good at supporting the entrepreneurialism which actually goes into the causing the £p figures the paperwork actually reports, rather than might (according to a textbook say) report. We aren’t the accountants only clients, but I believe we see the benefits of our moneys worth: a ‘investment’ in the meaning i use it above.

This new Minimum Wage for over 25s is a minimum, not a maximum, and the decisions/results that make increases economic can take years to come on steam (not at a swoosh of a pen), however, with careful calibration for the economic cycle this policy could be fulfilled by 2023-5 and the symbolic £9 ph might even be reached at the time the chancellor indicates rather than late (though the real terms increase to 60% might take ages to actually get to)

The point is that paying people more money is not an investment. If you require people to pay the same employees more, that is not an investment you are requiring them to make. It is an expense.

The only way inceasing wages could ever be an investment is if it allows you to replace your employees with better ones. Then it MIGHT be worth it.

I take it you have never worked for a SME or for yourself

Have you ever run one? Did you ever invest money by raising wages? How did you get your accountant to agree it was an investment?

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I take it you have never worked for a SME or for yourself andagain. The REAL economy isn’t like unemployment, or attending primary school, in Jobs people have managers, and businesses have owners: people who seek higher profits, turnover and security and make continual changes big, small, hard and easy to achieve it, day in, day out. Hard work today laid down on the hardwork of yesterday, utilised to create abetter more profitable present in the future.

“Which means you no longer need the current ones.” Not quite sure where you get that from, inertia is a big driver in life, and recruitment is a big undertaking for any concern, big or small. Investing in people and processes is a key driver in efficiency. On the whole easier just to work better in the day to day, rather than rely on blue sky thinking, babies born walking and talking mandarin or a super race of peaceful aliens to come along and solve all problems.

Entreprenuralism does exist and is a source of great innovation and progress. Stalinist determinism is theory. It doesn’t work.

Wages are based on potential productivity and efficiency and actual productivity

If that is true of the people who earn less than the living wage, then it will not pay to hire them, if you are required to pay no less than the living wage. So requiring people to pay a Living Wage higher than the wages of a quarter of the population in work would lead to a lot of those people being laid off.

Paying higher wages is an investment only if it allows you to hire better employees than your current ones. Which means you no longer need the current ones.

why? Wages are based on potential productivity and efficiency and actual productivity (which produce sales, which fund wages), among other market factors. Entrepreneurial talent and focus is what drives a economy forward. Directed Investments such as higher wages have to lead to higher returns for businesses, otherwise capitalism wouldn’t work.

Even £7,85 x 40 = £314/week before tax/NI, and I would like to see the likes of IDS live off that.